Wednesday, November 27, 2013

After the Robin Hood Investors Conference last week, Appaloosa Management founder David Tepper sat down with Bloomberg TV to talk about the markets.

On market valuation: He does not think we're in a bubble now as he compared P/E multiples over the last 5 years to the 5-year period running up to the 2000 bubble. Stocks now have seen little change in multiples, while stocks back then saw huge multiple expansion.

On airlines: "Our big play versus the market is the airlines. We're the biggest holder of many of these airlines." We flagged this big bet for readers of our Hedge Fund Wisdom newsletter over a year ago. See what else Tepper is betting on by subscribing (a brand new issue was just released last week).

On his 2014 investing approach: "We'll probably stay long. We recently put on a treasury short, to hedge ourselves against the equity markets. Little bit scared of tapering... higher rates... though rates won't go that high."

On to be worried about: "I would be worried if I was a long/short guy and not long enough, that's what I'd be worried about. But I'm not worried, because I am long. But if I'm a L/S guy who can only go 60% long ... the biggest risk for the market is you'll have multiple expansion, higher growth, 10% earnings growth next year, and you'll have another year of 20-30% (performance)."

On J.C. Penney (JCP): "It was a tiny position... a trade and we're done."

On Twitter (TWTR): They would have held Twitter longer, but they had a price target in the $40's and so when the stock hit that in the first days of trading, he exited. "It's a discipline."

On Citigroup (C): "Citi still has some pretty good upside, we think it can make 7 bucks a share."

On his performance this year: "I think gross we're in the 40's (%)."

On tapering: He does think it's time to start tapering. He also said: "There can be a short-term negative reaction. But if you're tapering, it's because there's stronger underlying US growth. And if there's growth, there's going to be higher P/E multiples and the market should be higher. If the market goes down, that's great, it'll be one more opportunity that people will be come and buy."

On what a lower Japanese Yen means: "It means higher P/E multiples in Japanese companies, straight out. That's the way it works, because they're such exporters. So when you have a weaker yen, you have higher earnings."

David Tepper Says Market Isn't a Bubble: His Thoughts on Valuation, Tapering, Airlines & More

After the Robin Hood Investors Conference last week, Appaloosa Management founder David Tepper sat down with Bloomberg TV to talk about the markets.

On market valuation: He does not think we're in a bubble now as he compared P/E multiples over the last 5 years to the 5-year period running up to the 2000 bubble. Stocks now have seen little change in multiples, while stocks back then saw huge multiple expansion.

On airlines: "Our big play versus the market is the airlines. We're the biggest holder of many of these airlines." We flagged this big bet for readers of our Hedge Fund Wisdom newsletter over a year ago. See what else Tepper is betting on by subscribing (a brand new issue was just released last week).

On his 2014 investing approach: "We'll probably stay long. We recently put on a treasury short, to hedge ourselves against the equity markets. Little bit scared of tapering... higher rates... though rates won't go that high."

On to be worried about: "I would be worried if I was a long/short guy and not long enough, that's what I'd be worried about. But I'm not worried, because I am long. But if I'm a L/S guy who can only go 60% long ... the biggest risk for the market is you'll have multiple expansion, higher growth, 10% earnings growth next year, and you'll have another year of 20-30% (performance)."

On J.C. Penney (JCP): "It was a tiny position... a trade and we're done."

On Twitter (TWTR): They would have held Twitter longer, but they had a price target in the $40's and so when the stock hit that in the first days of trading, he exited. "It's a discipline."

On Citigroup (C): "Citi still has some pretty good upside, we think it can make 7 bucks a share."

On his performance this year: "I think gross we're in the 40's (%)."

On tapering: He does think it's time to start tapering. He also said: "There can be a short-term negative reaction. But if you're tapering, it's because there's stronger underlying US growth. And if there's growth, there's going to be higher P/E multiples and the market should be higher. If the market goes down, that's great, it'll be one more opportunity that people will be come and buy."

On what a lower Japanese Yen means: "It means higher P/E multiples in Japanese companies, straight out. That's the way it works, because they're such exporters. So when you have a weaker yen, you have higher earnings."

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